The stock price of RED ELECTRICA CORPORACION SA ORD (OTCMKTS:RDEIF) recorded $0.08 in recent trading, touching $17.9 and getting interest from avid investors. It’s the latest price, but let’s analyze how the stock has been doing recently. In the past year, RED ELECTRICA CORPORACION SA ORD’s stock was -6.00%. According to the short interest report published recently, (RDEIF) had 32,600 shorted shares for 3.8 days to cover. The prior short interest was 40,500 for a $-19.51 change. The 52-Week High and Low are noted here. -80.44% (High), 3.71%, (Low). The stock had 8,600 average volume.

When moving into land of penny stock trading, one must determine whether the risk-reward ratio is favorable. Penny stocks can be tremendously attractive. Hollywood often shows selling or trading stocks being easy and fun, with millions of dollars earned as profits. It’s important to identify that there is considerable risk involved when putting money in penny stocks. The risks list include market volatility, getting stuck with fake shell firms created for the only objective of the ‘pump and dump’. For those who are not aware with the term, pump and dump happens where brokers promote the equity until prices rise, then sell the stock, leaving novice investors to bear the loss.

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It is a common thing to get caught up in the excitement of penny stock email bulletins. Though the circulars are a helpful means to get ideas, wise investors still perform due diligence on interested stocks. Some penny stock circulars show a disclaimer at the bottom that states something like ‘We are not market advisors, we’ve got compensation and we may have this stock in our portfolio.’ Further study must be carried out to find out if a firm actually has businesses or is simply a home office.

Many a times, when a promotional plan is designed, there are big shareholders offloading shares they might have bought long ago, waiting for an opportunity to recoup their investments. It never indicates that these firms termed as ‘fake’ aren’t good options for short-term trading. If you have disposable money that you can put in use to make a quick trade, what a firm does is less significant than recording a win on a trade. In such a scenario, things like stock promotions are advantageous for shareholders as they throw more light on a dark or defunct firm.

Look at a promotion last year of Cynk Technology (CYNK), which surged all the way to $21.95 from low of 6 cents. The firm itself had very little to deliver as far as fundamentals or operations are concerned, and its shares price was purely led by trading activity.

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